At time of writing, Bellamy’s Australia Limited [ASX:BAL] shares are trading at $8.48. Yesterday, the share price ended on $9.18, which marked a 12.5% increase from the previous figure. However, today’s drop is currently at a frightening 7.62%.
While there’s no single specific reason for this plummet, it’s no secret that Bellamy’s have been on the downward slope for the past few months.
The recent up and down for Bellamy’s
With no correlating ASX update to explain yesterday’s impressive spike, it seems shareholder interest may have peaked with the announcement of the Australian Marketing Institute (AMI) Marketing Excellence Award earlier this week.
The organisation Web Profits received this award for the Bellamy’s Firsts campaign they worked on, with Bellamy’s being a long-standing client of theirs. This campaign, which sought to encourage customers to share parent achievements over social media, was successful in gathering engagement across different media platforms. It was specifically targeted to mothers, who are one of the most advertised-to demographics in Australia.
But the company high was short-lived, as is seen with today’s share price decrease. This has come alongside a notice from Delta Partners, LP, who have ceased in being a substantial holder of Bellamy’s. Based in Boston, Delta Partners is a hedge fund sponsor who saw potential in this baby-formula company back in February 2017. This cease notice may therefore be making investors concerned over the promise of Bellamy’s to turn themselves around.
Of course, there are other factors at play.
The bigger picture
At the beginning of FY2019, global investment banking firm Goldman Sachs shared its belief that Bellamy’s shares were struggling because of tough competition in the organic dairy and infant formula market sector.
These include a2 Milk and Danone’s daughter company Aptamil — both of which are beating Bellamy’s in sales by heavily discounting excess stock. As of now, a2 Milk are pretty much maintaining their 8.5% increase from yesterday.
In the meantime, Bellamy’s share prices are plummeting in the absence of the potential Chinese profits. Chinese consumer-focused stocks are declining from this lingering trade war. There are fears the nation’s economic growth will deteriorate on the back of it.
What this means for Bellamy’s
This share price wave makes it evident of the volatility of the commodities market right now. Political tension and tariff threats are scaring away investors from supporting stocks which are heavily mass-market reliant on profits.
It seems until the Wall Street fall is properly corrected and political strife eventually smooths over, this commodity stocks will remain unstable.
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